When buying a home, you must deposit 10% of the purchase price with the notary. However, you can also arrange for a bank guarantee instead of using your own money.

Picture this: your bid is accepted. The next step is signing a purchase agreement with the seller. After that, you have a 3-day cooling-off period to decide if you truly want to go through with the purchase. If you change your mind and decide to cancel within this period, there's no need to pay anything.

The next step is to secure a mortgage. You typically have around 6-8 weeks to arrange and get your mortgage approved. During this time, the seller is vulnerable. If you can't secure a mortgage, the seller loses the deal and has to start over. A deposit safeguards the seller if the buyer backs out of the agreement. That is why you need a bank guarantee or to pay a 10% deposit. Your mortgage broker can help arrange a bank guarantee via third parties that charge a fixed fee.

Not everyone has sufficient personal savings to cover the deposit (10% of the purchase price) when buying a house. If you cannot pay this amount on your own, consider applying for a bank guarantee. In this case, the bank assures that it will cover the agreed deposit if you, as the buyer, fail to fulfil your obligations.

A bank guarantee is an assurance the bank provides, stating that it will cover the amount if you fail to meet your obligations. The advantage of a bank guarantee is that you don’t have to use your savings. For example, if the sale falls through because you cannot secure the mortgage, the seller may request the deposit under certain conditions. In the case of a bank guarantee, the bank will pay the deposit to the seller, and you will then owe that amount to the bank.

Normally, the cost of a bank guarantee is 1%. For example, for a house costing €350.000, the bank guarantee can cost approximately € 350. Please note the bank guarantee fee varies per lender. Some banks offer a bank guarantee; in other cases, a mortgage broker arranges it for you. The deposit is transferred to the notary, not the seller.

If the house purchase is successful, the notary will return the deposit to you during the closing, as shown in the settlement invoice. Alternatively, you can opt to use the deposited amount for your new home's mortgage.

However, if the sale falls through, perhaps due to an inability to secure a mortgage, the seller may request the deposit under specific conditions outlined in the purchase contract's resolutory clauses. In the case of a bank guarantee, the bank covers the deposit for the seller, and you are then obligated to repay the bank.

Our mortgage advisors are here to assist you in arranging a bank guarantee if you don't have sufficient savings or prefer not to use them for your property transaction. A bank guarantee is an alternative to using your personal savings and can be secured with a one-time fee.

We guide you through the process, ensuring you understand the terms and conditions. This option provides flexibility while helping you complete your property purchase without depleting your savings.

In the Netherlands, a deposit is a mandatory part of the purchase agreement. If you do not have sufficient funds to pay the 10% deposit after signing the agreement, you will need a bank guarantee.

However, a bank guarantee is unnecessary if you have enough savings to cover the 10%. Once you visit the notary to sign the purchase deed and agreements, the notary will refund the deposit to your bank account.

Are you looking for a bank guarantee? Schedule a free introductory call with our team. We are here to help you and explain how bank guarantees work in the Netherlands.